Commentary
Virtual Round Table
- by Michael J. Wolf , August 15, 2011
Madison Avenue's Big 3 weigh in on change, culture and the future of the advertising business
When MEDIA wanted to know how Madison Avenue's top brass were transforming their cultures and organizations to deal with the rapid change of the media and technology marketplace - not to mention traditional advertising business-models - we turned to three of the industry's most vocal leaders: Publicis' Maurice Levy, Interpublic's Michael Roth and WPP's Martin Sorrell -for a candid, round-table discussion.
As it turns out, titans of industry have a pretty tight schedule, so we conducted it as something of a virtual round table, via a separate series of interviews based on a common set of questions. What follows are some surprisingly reflective and revealing insights from Madison Avenue's Big 3 agency honchos into their strategies, as concurring and divergent as they may be.
Maurice Lévy, Chairman and Chief Executive Officer, Publicis Groupe
You made a huge bet by buying Digitas, and then merging it with other assets to create Vivaki. What have been the challenges in transforming your company into a technology and marketing-services business?
When we acquired Digitas, there were several ways we could have organized ourselves, but mainly they fell into two categories: The silo approach - we could put Digitas in a silo and let it grow and develop as a totally separate kind of business. Or we could place Digitas at the core of what we do - use this acquisition as an opportunity to transform ourselves. We decided that the way we could best serve our clients and help them reach for their goals would be to pick the second route. It was the more challenging solution, but it also held the most promise. That was the easy part: making the decision. The toughest part of any structural or organizational decision is making it work in reality. You're changing the way a lot of people work - their jobs, their responsibilities, their culture and their lives. That's a very complex, very human process. We needed to have strong management, strong views and a compelling proposition so that all our people could see the advantage of collaboration versus silos, of sharing versus sitting jealousy on your client information and keeping it for yourself. Fortunately, we have very skilled leaders and a good spirit. We've been able to generate a lot of new-business wins and a high level of client satisfaction. So by those two, very important benchmarks, we have been successful.
What other capabilities are you putting into place to ensure that you're relevant for the next wave of marketing and so that you can solve the marketing problems of the future?
Ever since Publicis began, we have been innovators, creators and entrepreneurs. We look at all our operations with an eye to what we can do better, and we keep constant attention on everything that is new. We just acquired Big Fuel last week, because social media is essential to doing business today. We're developing technology platforms, because they're indispensable to our clients. Our approach is to include new services, new kinds of people and new thinking without delay, as soon as they emerge in the market. We are not afraid to test the new or to venture into unknown territory. We owe it to our clients. The next big thing for us? We're constantly exploring new approaches for making our clients' dollars work more effectively at building their brands and pushing their sales.
Segmentation, addressability, the multiplication of tools and the combination of art and science are at the heart of what we are working on now. New challenges require new talent.
What kinds of people are you recruiting? Where are you finding them?
People: that's the most challenging issue we face. The resources are scarce, and competition for talent is huge: from Wall Street to start-ups, from platforms to media, from our classic competition to clients, everyone is looking for new, great talents. We need people who understand the new world and who have a feel for communication, strategic thinking, consensus understanding and creativity. It's not easy at all. So we hire some great PhDs in mathematics, physics and computer science, but we also hire sociologists and marginal creatives. We don't try to cover our needs with a "one-size-fits-all" kind of person. And my feeling is that poaching from competitors is sterile. It can fit some needs, occasionally, but it's not a solution. So yes, hiring is increasingly complex. Almost overnight, social media has become critical for each advertiser's marketing mix.
How are you aligning your organization against that? What works; what doesn't work?
With the Nerve Center, we have created a control tower that constantly surveys what is going on. That way, we have early signs of everything that is new and emerging, and we can figure out very swiftly how we can use it. We began working with Facebook and using some of their solutions long before any of our competitors did. By now we have developed that partnership, with new tools and training for our people, and so on. To understand how we at Publicis Groupe work and why we are ahead of our competitors, you have to understand that our very culture is about curiosity and innovation. That's what makes us so relevant to the platforms and to our clients.
How will the relationship between agencies such as yours and media companies change?
Blur is the name of the game. In the past, there were much clearer separations among the various roles and responsibilities. But digital is changing the role of media, the power of consumers, the ownership of a brand and the way content is created and distributed. And our role isn't limited to a box called, "advertising," or, "marketing services." No. Our role is in a box called, "Creative. Consulting. Content. Connect." Everything that will help our clients get another C - "Consumers" - to keep loving their brands and buying their products.
Michael I. Roth Chairman and Chief Executive Officer, Interpublic Group
From day one, your challenge has been creating a new Interpublic. How have you been able to incorporate the specialties of each of the company's new acquisitions into the larger Interpublic?
The biggest challenge for us during the turnaround period was to evaluate the assets that we had and ensure that they were fit to compete and win in the marketplace. We also wanted to be as efficient as possible with our investment, and that meant an organic approach to developing new competencies. As you know, our core strategy in the digital domain has been to get all our agencies, no matter what marketing arena they operated in, to the point where they can deliver world-class, digital solutions. That's as true in PR as it is in corporate branding or sports marketing. So I'd begin by pointing out that our biggest step in acquisitions was to focus on talent. Over the past five years, we've hired some of the best thinkers in digital marketing into all our shops. Having those people on board is what allowed us to launch our "open architecture" model at IPG and lead the industry in organic growth in both 2008 and 2010.
Where we have acquired companies, we've done so to fill specific, geographic needs, particularly in high-growth markets, as well as in highly specialized areas of digital. For example, we bought Reprise Media when search-engine marketing was a relatively new discipline. At that time, we needed a great resource very quickly to step in and help our agencies get up to speed. Our acquisition of HUGE has worked out very well. We've been highly respectful of their culture so that they can keep growing the business. But we've also paired them with Lowe to pursue major, multinational-client work on an international basis. The team at W is energizing the McCann offering in Brazil, and that's also true of Cubo for Mediabrands in that market. Draftfcb made Blue Barracuda its European digital-hub this year. Overall, you have to be very targeted in your activity, get to know the leadership and do a deal that makes financial sense for all parties.
Almost overnight, social media has become critical for each advertiser's marketing mix. How are you aligning your organization against that? What works; what doesn't work?
Social media is critical to every one of our clients and touches nearly every campaign we create. Which is why it has to be part of the vocabulary at every one of our agencies. Mullen does it for pretty much all of its clients, including Panera. They've even morphed their chief creative officer into a leader in innovation in the social space. Campbell-Ewald has led entire campaigns for the US Navy with its digital and social capabilities. And for our best-in-breed PR agencies, it's one of, if not the, key tool in their business arsenal. Mashable recently named Weber Shandwick one of the four best companies to work for if you're a social media professional - not among our competitors, but across all industries.
What works is hiring smart talent. What doesn't work is trying to isolate social media by putting it in a box. Most of our agencies blog, tweet and update - not just for their clients, but also for themselves. Social media helps amplify an agency's own, unique culture, which is what attracts clients and talent. For some of our agencies, their Facebook page is more important to their agency culture than the company's website.
What capabilities are you putting into place to ensure that you're relevant for the next wave of marketing and so that you can solve the marketing problems of the future?
The R/GA leadership talked about this at their seminar at Cannes this year, as did we. First, seek out diverse talent. Demographics are changing just as quickly as marketing technology, and we can't keep hiring from the same pool and expect to be successful. We think this is a real differentiator for IPG.
Second, our focus is on helping solve a client's business challenges - not just their branding or media ones. That's what will make us a higher-value partner - and, ultimately, get paid more fairly for our work. It's what HUGE talks about in their new book, Users, Not Customers, and why the work they do for Pepsi on the Refresh project has been so noteworthy.
Next, we're making technology available quickly and cheaply to all IPG offices. We're putting video conferencing and the latest communications tools in place that can help teams work together across regions and disciplines. Again, we think our ability to deliver integrated solutions for clients is a differentiator for IPG, and leveraging technology is crucial to the equation.
And finally, don't rest on your laurels. Whether it's an agency like R/GA, which has been named the digital agency of the decade, or the emerging media thinkers at a major, global network or one of our media agencies, all of us need to embrace change.
New challenges require new talent. What kinds of people are you recruiting? Where are you finding them?
It's absolutely key to bring people with unusual or unexpected backgrounds into our world. We're working with ad schools to find kids with diverse ways of thinking and training as integrated, marketing practitioners. In our Associates Program, we onboard, mentor and track junior-level people of color, each one across multiple IPG agencies. This is a best-in-class program that is paying dividends. Increasingly, I believe we'll be focused on bringing talent from media, banking and other fields into our increasingly complex world, which will only make us a more exciting place to build a career.
Sir Martin Sorrell, Chief Executive Officer, WPP Group
You've very purposefully
broadened your business - you could argue that today WPP is a research, transactions and marketing-services business on top of the core creativity and execution. What have been the challenges as
you transformed the organization?
Nobody likes change, including me. It disrupts your equilibrium, and brings uncertainty and unpredictable outcomes.
However, traditional or legacy companies, like traditional advertising agencies, have to change. Companies that are better positioned, like our direct agencies, have to change. And we have to take risks by investing in or acquiring better-positioned, new companies - rather like a strategic, venture capitalist.
It's not easy changing the engines on a plane that's flying and, apparently, flying pretty well - particularly when the measurement metrics are different for the new, in comparison with the old.
The temptation for management and boards, particularly non-executives, is to avoid
change. That's the next generation's responsibility, and it's inherently risky. All in all, it makes you feel very uncomfortable.
What capabilities are putting into
place to ensure that you're relevant for the next wave of marketing and that you can solve the marketing problems of the future?
The basics are the same: strategy, big ideas and implementation. But it needs new types of people - software engineers - and the application of technology and the interpretation of data. Information is no longer power; the ability to interpret it is.
Incentive systems also have to change, as do structures. Internal, joint ventures and partnerships, along with joint P&Ls, are increasingly the ways used to bring people
together. Clients are less interested in the operating brands and more in the people working on their business.
What kinds of people are you recruiting? Where are you finding
them?
There will be more nationals, essential for growing our businesses, in the new geographies - back to the future of the nineteenth century. There will also be
technologists, like software engineers, and data experts to interpret and analyze information.
The heart of our business is increasingly what we call media-investment management: direct,
Internet-based, with interactive and data analytics. Starting again today, these would be on a par with strategy, creative and distribution.
Instead of "nicking" talent as we
are prone to do as an industry, we have to aggressively recruit and develop the best talent from the best schools - universities, art and design schools, film schools, engineering schools, etc. But
do it consistently, without interruption, come rain or come shine - just like McKinsey and Goldman Sachs.
How will you reshape the organization as the BRIC + 11 countries continue
to be a strong growth engine for WPP?
The key is "nationals, not expats." In this way, the best nationals will continue to join us. As the balance of power shifts increasingly to the BRICS and Next 11, these nationals have to have a greater say in the governance of the global company.
Regional and country management may not be appropriate. Why run Singapore or Portugal in the same way that you run China or India? It doesn't make sense. Direct reporting to the center of the BRICs and Next 11 may be necessary, as regional structures are changed or dropped.
Data has now become an important piece of your business. Do you believe that it is an advantage versus other marketing-services companies?
It's
an increasingly critical differentiator, but we have not sufficiently woven data into our corporate structure or what we offer. The interpretation of information and ROI analysis will increasingly
be a major differentiator.
Almost overnight, social media has become critical for each advertiser's marketing mix. How are you aligning your organization against that? What
works; what doesn't work?
Social media's biggest impact so far has been on public relations, and data and editorial influence become more important as a result. A social recommendation has become even more important than paid-for publicity, as we always knew from research.
Social media will eventually permeate all we do. We will have to adjust our legacy companies and make new acquisitions and investments, just as above in the case of change.
Invading social space carries risks and requires patience. Monetization may have to wait.
How will the relationship between agencies such as yours and media companies change? Will you become a producer of programming?
